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Only 30% respond to mortgage lenders over interest-only loans

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  • 10/06/2014
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Only 30% respond to mortgage lenders over interest-only loans
Mortgage lenders have contacted the majority of interest-only borrowers whose mortgages will mature by the end of 2020, but only three-in-ten have responded to their lender.

This follows a commitment made by lenders last year to contact this group of borrowers to see how they plan to repay their loans.

However, just 30% of customers contacted have responded to communication about their loan, despite lenders employing various techniques including letters, telephone calls, face-to-face meetings and home visits.

The Council of Mortgage Lenders (CML) said lenders including a specific call to action had been most successful at generating responses.

Of the borrowers who had responded around four-fifths had a plan in place while the remainder had been offered solutions including term extensions, permanent conversions to capital and interest, and overpayments.

The CML said borrowers with very small balances, those already in discussion with a lender and customers with loans maturing after 2020 had not been contacted in the past year.

CML director-general Paul Smee said: “We are pleased to report that lenders have met their initial commitment to contact interest-only borrowers whose mortgages are due to mature by the end of 2020. But we all recognise that this is just the start of a long term, continuous communication programme.

“So far, around 30% of customers who have interest-only mortgages maturing by 2020 have responded to their lender on their repayment plans. This is an encouraging start, but also highlights the challenges of achieving effective two-way communication.

“If you have an interest-only mortgage due to end before the end of 2020 and you have not yet responded, it is important to communicate with your lender, even if you know your plans are on course. If they are not, your lender will want to work with you to help minimise any difficulties.”

Martin Wheatley, chief executive officer at the Financial Conduct Authority, said: “This forward looking and consumer-at-the heart type of action is a prime example of a model demonstrating good conduct outcomes and putting customers first; it’s good to see that real progress is being made.”

 

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